Wednesday
28Mar2007
Between Here and Hell
Wednesday, March 28, 2007 at 10:03PM
What is as large as four shopping malls, has 17 miles of paved roadway, and is 75' below the ground? The Underground Business Center in Louisville, KY is a warehouse and storage facility with almost four million square feet housed in a former limestone mine. It runs beneath homes, commercial buildings, and an expressway above. It is a brilliant example of developing a highest and best use, as the property above the mine ceiling was sold off, likely with no impairment to the value. (If you bought a property, how much less would you expect to pay if you only actually owned down to 75'? As owner Jim Lowery explained to me, "We own the property from 1" above the ceiling down to hell, they own from 1" above the ceiling to heaven." It was a brilliant way to split the property, and I surmise that their basis is very, very, low.
The property is extremely safe - you might not even know if a Class 5 Tornado was above - and acted as a military hospital and planned living quarters for generals and congress members during the Cuban Missile Crisis. It operates at a cool 56 - 60 degrees year round. The temperature variation is due to air circulation at outside temperatures. Barometric pressure causes a continuous breeze through the cave that, like the tide, changes direction during the day. Not only do you eliminate the cost of air conditioning space, you eliminate the equipment and the maintenance costs on the equipment.
Spaces are generally 24' clear and a typical 40,000 SQFT space will have dock high loading for 5-6 trucks. Rates are priced industrial gross, common for the area and to both the landlord's and tenant's advantage due to an extremely reduced tax rate (what is the property tax on a cave?). Distribution companies that now have to pick from separate dry storage and air conditioned areas can combine all products and slot SKU's based on velocity, achieving huge efficiency gains.
The country has many underground storage facilities in former mines, from Pennsylvania to Kansas. You can read about some of them at Deep Vaults. If your business has product that needs climate controlled space, and you're looking for a distribution center in the central U.S., you may find a significant opportunity to gain a competitive edge with an underground facility.
I was told that a $6000/month utility bill for air conditioned space would be reduced to less than $1000/month (for lighting and equipment). Of course, when it comes to utility costs, Less is More.
The property is extremely safe - you might not even know if a Class 5 Tornado was above - and acted as a military hospital and planned living quarters for generals and congress members during the Cuban Missile Crisis. It operates at a cool 56 - 60 degrees year round. The temperature variation is due to air circulation at outside temperatures. Barometric pressure causes a continuous breeze through the cave that, like the tide, changes direction during the day. Not only do you eliminate the cost of air conditioning space, you eliminate the equipment and the maintenance costs on the equipment.Spaces are generally 24' clear and a typical 40,000 SQFT space will have dock high loading for 5-6 trucks. Rates are priced industrial gross, common for the area and to both the landlord's and tenant's advantage due to an extremely reduced tax rate (what is the property tax on a cave?). Distribution companies that now have to pick from separate dry storage and air conditioned areas can combine all products and slot SKU's based on velocity, achieving huge efficiency gains.
The country has many underground storage facilities in former mines, from Pennsylvania to Kansas. You can read about some of them at Deep Vaults. If your business has product that needs climate controlled space, and you're looking for a distribution center in the central U.S., you may find a significant opportunity to gain a competitive edge with an underground facility.
I was told that a $6000/month utility bill for air conditioned space would be reduced to less than $1000/month (for lighting and equipment). Of course, when it comes to utility costs, Less is More.
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